EXHIBIT 13.2
Consolidated Statement of Operations
(dollars in millions, except per share) 1994 1993 1992
REVENUES
Sales and operating revenues
(excludes excise taxes) $2,606.3 $2,555.3 $ 2,602.6
Other revenues, net 14.8 10.2 9.1
2,621.1 2,565.5 2,611.7
COSTS AND EXPENSES
Cost of products sold and
operating expenses 2,269.5 2,305.5 2,374.1
Depreciation 70.9 64.3 56.8
Selling and administrative 71.7 60.9 59.9
Taxes other than income taxes 39.9 36.7 36.4
Interest 43.3 40.6 40.5
2,495.3 2,508.0 2,567.7
Income before Tax Provision and
Cumulative Effect
of Accounting Changes 125.8 57.5 44.0
Provision for Income Taxes 50.0 24.9 17.6
Income before Cumulative Effect of
Accounting Changes 75.8 32.6 26.4
Cumulative Effect of Accounting Changes
(net of income taxes) - (14.2) (17.7)
Net Income 75.8 18.4 8.7
Dividend Requirement on Preferred Stock 4.3 2.4 -
Earnings Applicable to Common Shares $ 71.5 $ 16.0 $ 8.7
Primary Earnings (Loss) Per Common Share
Before Cumulative Effect of Accounting Changes $ 2.45 $ 1.04 $ 0.92
Cumulative Effect of Accounting Changes - (0.49) (0.62)
Total $ 2.45 $ 0.55 $ 0.30
Fully Diluted Earnings (Loss) Per Common Share
Before Cumulative Effect of Accounting Changes $ 2.34 $ 1.04 $ 0.92
Cumulative Effect of Accounting Changes - (0.49) (0.62)
Total $ 2.34 $ 0.55 $ 0.30
Cash Dividends Per Share
Common $ 0.53 $ 0.52 $ 0.52
Preferred $ 2.50 $ 1.28 $ -
Weighted Average Common Shares Outstanding
(thousands of shares)
Primary 29,128 28,871 28,703
Fully Diluted 32,383 28,968 28,703
Pro forma amounts assuming the effect of the 1993
change in accounting principle is applied retroactively:
1994 1993 1992
Income before cumulative effect of accounting changes $ 75.8 $ 32.6 $ 29.6
Cumulative effect of adopting FAS 106 and FAS 109 - - (17.7)
Net income $ 75.8 $ 32.6 $ 11.9
The Notes to Consolidated Financial Statements are an integral part of this and
related Consolidated Financial Statements.
Consolidated Balance Sheet
December 31,
(dollars in millions, except per share) 1994 1993
ASSETS
Current Assets
Cash and cash equivalents $ 27.4 $ 12.8
Receivables, less doubtful receivables 211.6 148.8
Inventories 291.0 186.0
Prepaid expenses 10.4 8.6
Total Current Assets 540.4 356.2
Properties and Equipment, less accumulated
depreciation 1,026.1 941.1
Deferred Charges and Other Assets 54.3 51.9
$1,620.8 $1,349.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Long-term debt payable within one year $ 3.9 $ 3.5
Accounts payable 199.3 88.5
Accrued liabilities 170.9 128.4
Total Current Liabilities 374.1 220.4
Long-term Debt 509.2 486.2
Deferred Income Taxes 81.5 48.7
Other Liabilities and Deferred Credits 67.0 66.2
Stockholders' Equity
Preferred Stock, $.01 par value
Authorized shares - 25,000,000
Issued and outstanding shares -
1,725,000; 1,725,000 in 1993 0.0 0.0
Common Stock, $.01 par value
Authorized shares - 75,000,000
Issued shares - 29,014,711;
28,927,217 in 1993
Outstanding shares - 28,896,917;
28,903,468 in 1993 0.3 0.3
Paid-in Capital 447.3 444.8
ESOP Stock and Stock Held in Treasury (45.4) (47.9)
Retained Earnings 186.8 130.5
Total Stockholders' Equity 589.0 527.7
$1,620.8 $1,349.2
See Note 16 - Commitments and Contingencies
The Notes to Consolidated Financial Statements are an integral part of this and
related Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in millions) 1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 75.8 $ 18.4 $ 8.7
Adjustments to arrive at net cash provided
by operating activities:
Depreciation 70.9 64.3 56.8
Deferred income taxes 31.9 (9.9) (4.2)
Loss on sale of properties and equipment 0.9 3.0 1.3
Cumulative Effect of Accounting Changes - 23.6 25.8
Cash flow from futures activity - (3.0) (7.0)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (62.8) (7.2) 5.2
Decrease (increase) in inventories (105.0) 7.2 49.6
Decrease (increase) in prepaid expenses (1.8) (2.4) (1.7)
Increase (decrease) in accounts payable
and accrued liabilities 153.3 3.3 (28.9)
Other, net 13.0 12.0 14.7
NET CASH PROVIDED BY OPERATING ACTIVITIES 176.2 109.3 120.3
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of futures contracts - (133.3) (157.2)
Settlement of futures contracts - 136.3 164.2
Proceeds from sales of facilities 7.1 2.0 6.6
Purchase of properties and equipment (162.1) (131.8) (170.5)
Expenditures for investments (3.2) (1.3) (22.4)
NET CASH USED IN INVESTING ACTIVITIES (158.2) (128.1) (179.3)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in commercial paper - (108.5) 89.9
Increases in long-term debt 214.2 321.8 246.3
Repayments of long-term debt (190.8) (260.5) (245.4)
Payments of long-term liability (10.2) (11.3) (16.1)
Funds received from ESOP 5.1 4.3 3.7
Issuance of Common Stock 0.9 1.7 -
Purchase of Treasury Stock (3.4) (0.6) (2.8)
Issuance of Preferred Stock - 84.3 -
Sale of Common Stock held in treasury 0.5 0.1 0.1
Dividends paid (19.7) (17.2) (14.9)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (3.4) 14.1 60.8
Net increase (decrease) in cash and cash equivalents 14.6 (4.7) 1.8
Cash and cash equivalents at beginning of period 12.8 17.5 15.7
Cash and cash equivalents at end of period $ 27.4 $ 12.8 $ 17.5
Excluded from the Consolidated Statement of Cash Flows for the year ended
December 31, 1993, was the effect of certain non-cash activities in which the
Company exchanged an undivided interest in certain properties and equipment for
an equity ownership interest in a limited liability company. This
transaction increased investments by $19.2 million and decreased properties and
equipment by $19.2 million.
The Notes to Consolidated Financial Statements are an integral part of this and
related Consolidated Financial Statements.
Notes to Consolidated Financial Statements
Note 1 - ORGANIZATION
Diamond Shamrock, Inc. (the "Company") was organized in February 1987, as a
wholly-owned subsidiary of Maxus Energy Corporation, formerly Diamond Shamrock
Corporation ("Maxus"), to engage in the business of refining and marketing of
petroleum products and related businesses.
Effective April 30, 1987, the shares of the Company's common stock, $0.01
par value (the "Common Stock") were distributed to the shareholders of Maxus in
a spin-off transaction (the "Spin-off") approved by the Maxus Board of Directors
on February 1, 1987. As a result, the Company became an independent entity which
is primarily engaged in the refining and marketing of petroleum products.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
The Consolidated Financial Statements have been prepared in conformity with
generally accepted accounting principles, the most significant of which are
described below.
Consolidation
The Consolidated Financial Statements include the accounts of the Company
and its subsidiaries. Investments in other companies which are at least 20%
owned are accounted for on the equity method. All significant intercompany
accounts and transactions have been eliminated.
Cash and Cash Equivalents
It is the Company's policy to invest cash in excess of operating
requirements in highly liquid income producing investments. The Company
considers such investments with a maturity of three months or less at the time
of purchase to be cash equivalents.
Inventories
Inventories are valued at the lower of cost or market. The last-in, first-
out (LIFO) method is used to determine cost for inventories of crude oil and
refined products of the Refining and Wholesale segment, motor fuel products of
the Retail segment, and propylene products in the Allied Businesses segment.
Costs of all other inventories are determined on an average cost method.
The Company includes purchased items in inventory when the product has been
delivered and/or when title has passed to the Company. Imbalances in product
exchanges are also reflected in the inventory account balance. Products owed to
the Company are included in inventory and products owed to exchange partners are
excluded from inventory.
Financial Instruments
The Company acquires a major portion of its crude oil requirements through
the purchase of futures contracts on the New York Mercantile Exchange. The
Company also uses the futures market to manage the price risk inherent in
purchasing the crude oil in advance of the delivery date, and in maintaining the
inventories contained within its refinery and pipeline systems. The Company
defers the impact of changes in the market value of these contracts until such
time as the hedged transaction is completed.
The Company has not entered into any form of interest rate caps or swaps on
any of its fixed or variable rate debt in recent years.
Properties and Equipment
Properties and equipment are carried at cost. Major additions are
capitalized; expenditures for repairs and maintenance are charged against
earnings. Properties and equipment are depreciated generally on the straight-
line basis over their estimated useful lives.
The Company capitalizes the interest cost associated with major property
additions while in progress, such amounts being amortized over the useful lives
of the related assets.
Income Taxes
Effective January 1, 1992, the Company adopted Financial Accounting
Standard No. 109 ("FAS 109"), "Accounting for Income Taxes" (see Note 3).
Under FAS 109 deferred income taxes are provided for the differences in the
financial reporting and tax bases of assets and liabilities, and for tax credits
available for carry forward.
Earnings per Share
The computation of primary earnings (loss) per share is based on the
weighted average number of common shares outstanding during the year plus common
stock equivalents consisting of stock options, stock awards subject to
restrictions, and stock appreciation rights. In June 1993, the Company issued
1.725 million shares of 5% Cumulative Convertible Preferred Stock (the
"Preferred Stock") in a private transaction for an aggregate of $86.3 million,
before discounts and transaction costs. Each share of Preferred Stock is
convertible into approximately 1.8868 shares of Common Stock. Primary earnings
(loss) per common share have been adjusted for dividend requirements on
Preferred Stock. The computation of fully diluted earnings (loss) per share, in
addition to the adjustments for primary earnings (loss) per share for the year
ended December 31, 1994, assumes conversion of the Preferred Stock during the
time that the shares are outstanding. The computation of fully diluted earnings
(loss) per share for the year ended December 31, 1993, did not assume conversion
of the Preferred Stock because the effect would have been antidilutive.
Other Postemployment Benefits
Effective January 1, 1992, the Company adopted Financial Accounting
Standard No. 106 ("FAS 106"), "Employers' Accounting for Postretirement Benefits
Other Than Pensions" (see Note 3).
Effective January 1, 1993, the Company adopted Financial Accounting
Standard No. 112 ("FAS 112"), "Employers' Accounting for Postemployment
Benefits, an Amendment of FASB Statements No.5 and 43." FAS 112 addresses the
accounting for compensation for future absences and postemployment benefits
provided to former or inactive employees that are not provided as part of a
pension or postretirement plan. The adoption of the new standard had no material
effect on the results of operations and did not require recording any cumulative
effect of adoption of a change of accounting method.
Note 3 - CHANGES IN ACCOUNTING PRINCIPLES
At December 31, 1989, the Company recorded a liability for payments to be
made pursuant to the Distribution Agreement (the "Distribution Agreement") with
Maxus, the Company's former parent, for certain liabilities relating to
businesses of Maxus discontinued or disposed of prior to the date on which the
Company was spun off to Maxus shareholders. The Company's total liability under
the Distribution Agreement is limited to $85.0 million. At December 31, 1989,
the Company believed that it would be required to make payments under the
Distribution Agreement beginning in 1991 and continuing for approximately ten or
more years. The Company did, in fact, begin to make payments in 1991, and based
on current levels of payments it is expected that payments will continue until
1997.
Inasmuch as the total amount of the liability was known ($85.0 million) and
the Company believed the timing and amount of the payments could be estimated
with reasonable accuracy, the liability at December 31, 1989 was recorded on a
discounted basis, in accordance with the accounting rules in existence at the
time. Annual additions to the liability had been recorded as interest through
December 31, 1992.
During June 1993, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board ("FASB") released the minutes of its May 20, 1993
meeting during which the EITF announced a consensus with regard to certain
issues of "Accounting for Environmental Liabilities" (Issue 93-5). The
consensus effectively changed the criteria for determining when a liability may
be recorded on a discounted method. Consequently, in 1993, the Company changed
the accounting method for recording its liability under the Distribution
Agreement to reflect the entire unpaid amount rather than the discounted amount
of the liability.
The change of method was recorded as if the change had occurred on January
1, 1993 and is reflected in the Consolidated Statement of Operations as the
Cumulative Effect of Accounting Changes for the twelve months ended December 31,
1993. The amount of $14.2 million represented the unrecorded liability of $23.6
million at December 31, 1992, less related tax benefit of $9.4 million.
The following pro forma information is provided to reflect the earnings per
share amounts which would have been reported had the undiscounted accounting
method for recording the liability been adopted in the year the liability was
originally recorded.
1994 1993 1992
Pro forma Primary Earnings
(Loss) Per Share Before
Cumulative Effect of
Accounting Changes $ 2.45 $ 1.04 $ 1.03
Cumulative Effect of Adopting
FAS 106 and FAS 109 - - (0.62)
Total $ 2.45 $ 1.04 $ 0.41
Pro forma Fully Diluted Earnings
(Loss) Per Share Before
Cumulative Effect of
Accounting Changes $ 2.34 $ 1.04 $ 1.03
Cumulative Effect of Adopting
FAS 106 and FAS 109 - - (0.62)
Total $ 2.34 $ 1.04 $ 0.41
Earnings per share as currently reported:
1994 1993 1992
Primary Earnings (Loss)
Per Share Before
Cumulative Effect of
Accounting Changes $ 2.45 $ 1.04 $ 0.92
Cumulative Effect of
Accounting changes - (0.49) (0.62)
Total $ 2.45 $ 0.55 $ 0.30
Fully Diluted Earnings (Loss)
Per Share Before
Cumulative Effect of
Accounting Changes $ 2.34 $ 1.04 $ 0.92
Cumulative Effect of
Accounting changes - (0.49) (0.62)
Total $ 2.34 $ 0.55 $ 0.30
Effective January 1, 1992, the Company adopted FAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This method of
accounting for postretirement benefits accrues the actuarially determined costs
ratably during the working lives of eligible employees rather than accounting
for the costs on a "pay-as-you-go" basis. The charge to income as of
January 1, 1992, was $15.5 million, or $0.54 per share, net of tax benefits of
$10.3 million, or $0.36 per share.
Effective January 1, 1992, the Company adopted the provisions of FAS 109,
"Accounting for Income Taxes." FAS 109 requires that liabilities and
receivables for future taxes be calculated using a balance sheet approach rather
than an income statement approach. The Company recognized the cumulative effect
of adopting the pronouncement as of January 1, 1992, with a charge to earnings
of $2.2 million, or $0.08 per share.
Effective January 1, 1993, the Company adopted FAS 112, "Employers'
Accounting for Postemployment Benefits, an Amendment of FASB Statements No. 5
and 43." FAS 112 addresses the accounting for compensation for future absences
and for postemployment benefits provided to former or inactive employees that
are not provided as part of a pension or postretirement plan. The adoption of
the new standard had no material effect on the results of operations and did not
require recording any cumulative effect of adoption of a change of accounting
method.
Note 4 - BUSINESS SEGMENTS
The Company's revenues from continuing operations are principally derived
from three business segments: Refining and Wholesale, Retail, and Allied
Businesses. Refining and Wholesale is engaged in crude oil refining and
wholesale marketing of refined petroleum products. Retail is engaged in selling
refined petroleum products and other merchandise. Allied Businesses is
engaged in transporting, storing and marketing natural gas liquids; upgrading
refinery grade propylene and selling polymer grade propylene; selling anhydrous
ammonia fertilizer; selling specialized telephone services; selling
environmental testing and related services; and investing in petroleum related
opportunities.
The Company's business segments operate primarily in the Southwest region
of the United States with particular emphasis in Texas, Colorado, Louisiana, New
Mexico, and Oklahoma.
Refining
and Allied
Wholesale Retail Businesses Total
1994
Sales and operating
revenues $ 1,320.8 $ 974.3 $ 311.2 $2,606.3
Costs and expenses 1,174.0 915.4 285.2 2,374.6
Operating profit $ 146.8 $ 58.9 $ 26.0 $ 231.7
Interest expense 43.3
Administrative expense 62.6
Income before
tax provision $ 125.8
1993
Sales and operating
revenues $ 1,294.8 $ 958.1 $ 302.4 $2,555.3
Costs and expenses 1,220.9 895.4 287.4 2,403.7
Operating profit $ 73.9 $ 62.7 $ 15.0 $ 151.6
Interest expense 40.6
Administrative expense 53.5
Income before tax
provision and
cumulative effect of
accounting changes $ 57.5
1992
Sales and operating
revenues $ 1,290.4 $ 970.7 $ 341.5 $2,602.6
Costs and expenses 1,222.3 924.1 318.6 2,465.0
Operating profit $ 68.1 $ 46.6 $ 22.9 $ 137.6
Interest expense 40.5
Administrative expense 53.1
Income before tax
provision and
cumulative effect of
accounting changes $ 44.0
Intersegment sales and operating revenues are generally derived from
transactions made at prevailing market rates. Sales of refined petroleum
products from the Refining and Wholesale segment to the Retail segment amounted
to $502.7 million in 1994, $510.1 million in 1993, and $542.7 million in 1992.
Sales of natural gas liquids from the Allied Businesses segment to the Refining
and Wholesale segment amounted to $15.8 million in 1994, $23.4 million in 1993,
and $31.5 million in 1992.
Identifiable Assets
1994 1993 1992
Refining and Wholesale $1,048.2 $ 846.8 $ 760.9
Retail 333.0 281.2 265.0
Allied Businesses 159.0 142.7 194.4
Corporate 80.6 78.5 77.2
$1,620.8 $1,349.2 $1,297.5
Identifiable assets are those assets that are utilized by the respective
business segment. Corporate assets are principally cash, investments, and other
assets that cannot be directly associated with the operations or activities of a
business segment.
Note 5 - TAXES
The Company's provision for income taxes was comprised of the following:
1994 1993 1992
Current
Federal $ 16.4 $ 21.8 $ 11.9
State and local 1.7 3.5 1.7
18.1 25.3 13.6
Deferred
Federal 29.1 (0.3) 3.0
State and local 2.8 (0.1) 1.0
31.9 (0.4) 4.0
$ 50.0 $ 24.9 $ 17.6
Federal income taxes paid (net of refunds) during 1994, 1993 and 1992 were:
$11.0 million, $21.5 million, and $10.0 million, respectively.
The principal reasons for the difference between the statutory federal
income tax rate and the Company's provision for income taxes were:
1994 1993 1992
Tax provision at
statutory federal rate
(35% in 1994 and 1993,
34% in 1992) $ 45.6 $ 20.1 $ 14.9
Effect of tax rate increase on
deferred taxes - 1.7 -
State income taxes, net of
federal tax benefit 3.3 2.2 1.7
Other, net 1.1 0.9 1.0
$ 50.0 $ 24.9 $ 17.6
The components of the net deferred tax liability are summarized as follows:
1994 1993 1992
Deferred tax assets
Inventory valuation reserves $ 10.5 $ 21.7 $ 9.7
Postretirement and
pension plan liabilities 13.0 13.1 12.2
Long-term shared costs
liability 7.1 10.5 6.8
Alternative minimum
tax credit 16.0 7.1 9.3
Allowance for doubtful
receivables 1.9 2.0 1.7
Miscellaneous other 13.1 8.1 6.2
61.6 62.5 45.9
Deferred tax liabilities
Properties and equipment (119.4) (111.0) (107.3)
Inventory valuation reserves (21.3) - -
Miscellaneous other (2.4) (0.2) -
(143.1) (111.2) (107.3)
$ (81.5) $(48.7) $(61.4)
For federal income tax purposes at December 31, 1994, the Company had $0.9
million of unused general business tax credits which expire in 2009 and $16.0
million of minimum tax credit available for carry forward with an indefinite
expiration.
Taxes other than income taxes were comprised of the following:
1994 1993 1992
Real and personal property $ 18.1 $ 15.8 $ 15.6
Payroll 11.6 11.2 10.5
Superfund 8.6 7.8 8.9
Other 1.6 1.9 1.4
$ 39.9 $ 36.7 $ 36.4
Note 6 - EMPLOYEE BENEFIT PLANS
Defined Benefit Pension Plans
The Company maintains a retirement plan known as the Career Average
Retirement Income Plan (the "CARIP"). Under the CARIP, eligible employees
acquire a right upon retirement to an annual amount equal to 2% of the
employee's eligible earnings from February 1, 1987 to May 31, 1989, and 1% of
the employee's eligible earnings from June 1, 1989 forward, plus a potential
supplement under certain circumstances.
The Company also maintains a retirement plan for its collective bargaining
groups (the "Bargaining Unit Plan"). The Bargaining Unit Plan generally provides
benefits that are based on the union member's monthly base pay during the five
years before retirement.
The Company also maintains a retirement plan referred to as the Retirement
Income Plan (the "RIP") to cover certain employees not eligible for coverage
under the CARIP or the Bargaining Unit Plan. Under the RIP, eligible employees
acquire a right upon retirement to a monthly amount equal to $5 for each year of
plan service from January 1, 1989 forward.
The Company also maintains a retirement plan referred to as the Excess
Benefits Plan (the "Excess Benefits Plan"), which provides benefits in place of
reductions of qualified benefits resulting from various statutory limitations
imposed by the Internal Revenue Code and the deferral of compensation through
the Deferred Compensation Plan.
In addition, the Company has adopted a Supplemental Retirement Plan (the
"SRP"). The SRP provides additional benefits for executive officers in excess of
amounts payable under the defined benefit plans of the Company or any
predecessor employer.
The Company also provides a retirement plan for its non-employee Directors
(the "Directors Retirement Plan"). The Directors Retirement Plan provides an
annual retirement benefit for a period of time equal to the shorter of (a)
length of service as a non-employee Director or (b) life of Director.
Net periodic pension cost included the following components:
1994 1993 1992
Service cost-benefits earned
during the period $ 3.4 $ 2.5 $ 2.3
Interest cost on projected
benefit obligation 2.8 2.2 1.9
Actual return on assets 0.2 (1.9) (1.2)
Net amortization and deferral (2.0) 0.5 (0.1)
Net periodic pension cost $ 4.4 $ 3.3 $ 2.9
Significant assumptions used in the actuarial calculations were:
1994 1993 1992
Discount rates 8.50% 7.25% 9.00%
Rates of increase in
compensation level 5.00% 4.50% 5.50%
Expected long-term rate of return
on assets 9.00% 9.00% 9.00%
The Company's trusteed plans are funded at amounts required by the Employee
Retirement Income Security Act. Effective December 31, 1994, the Company raised
its discount rate to 8.50% and its rates of increase in compensation level to
5.00%.
The following table summarizes the funded status of the Company's defined
benefit pension plans and the related amounts recognized in the Company's
Consolidated Balance Sheet:
1994 1993
Plans Plans Plan Plans
Where Where Where Where
Assets Benefits Assets Benefits
Exceed Exceed Exceed Exceed
Benefits Assets Benefits Assets
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 12.3 $ 14.6 $ 6.9 $ 16.5
Accumulated benefit
obligation 12.3 15.6 7.4 18.6
Projected benefit
obligation 17.2 18.2 11.5 21.5
Plan assets at fair
market value 13.9 12.3 8.5 14.9
Projected benefit obligation
in excess of plan assets 3.3 6.2 3.0 6.6
Unrecognized net loss (2.6) (5.3) (1.9) (7.0)
Unrecognized net obligation (0.3) (0.2) (0.1) (0.5)
Unrecognized prior
service cost 0.1 0.8 (0.2) 1.1
Adjustment to recognize
minimum liability 0.0 2.1 0.0 3.4
Pension liability recognized
in the Consolidated
Balance Sheet 0.4 3.5 0.8 3.6
In 1994, the plans where assets exceeded the accumulated benefit obligation
were the Bargaining Unit Plan and the SRP. In 1993, the plan where assets
exceeded the accumulated benefit obligation was the Bargaining Unit Plan.
At December 31, 1994, plan assets were invested in bonds (58%), equity
securities (33%), and other investments (9%). At December 31, 1993, plan assets
were invested in bonds (53%), cash equivalents (13%), equity securities (26%),
and other investments (8%).
Retiree Health Care and Life Insurance Benefits
The Company provides certain health care and life insurance benefits to
eligible retirees. Employees who participate in the CARIP are eligible for
retiree health care and life insurance benefits if they satisfy certain age and
service requirements. The Company also shares in the cost of providing similar
benefits to former Maxus employees pursuant to the Distribution Agreement (see
Note 16).
Generally, the health care plans pay a stated percentage of most medical
expenses reduced for any deductibles, payments made by government programs, and
other group coverage. The cost of providing most of these benefits is shared
with retirees. The plans are unfunded.
The Company adopted Financial Accounting Standard No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," as of January 1,
1992. This statement requires the accrual of the cost of providing for
postretirement health care and life insurance benefits during the active service
period of the employee. The Company elected to recognize the total accumulated
liability, measured as of January 1, 1992. This resulted in a one-time charge of
$15.5 million, or $0.54 per share, net of tax benefit of $10.3 million, or $0.36
per share (see Note 3).
Prior to 1992, the Company recognized expense in the year the benefits were
provided.
The following table sets forth the plans' status and the amount recognized
in the Company's Consolidated Balance Sheet as of December 31, 1994 and 1993:
Accumulated postretirement benefit obligation attributable to:
Health Life
Care Insurance Total
1994 1993 1994 1993 1994 1993
Retirees $ 19.0 $ 16.6 $ 2.8 $ 3.2 $ 21.8 $ 19.8
Fully Eligible Active
Plan Participants 1.6 1.5 0.1 0.0 1.7 1.5
Other Active
Plan Participants 3.3 3.6 3.2 2.4 6.5 6.0
Unrecognized net loss (1.3) 0.0 (0.4) 0.0 (1.7) 0.0
Total Accumulated
Postretirement Benefit
Obligation $ 22.6 $ 21.7 $ 5.7 $ 5.6 $ 28.3 $ 27.3
Net Periodic Postretirement Benefit Cost:
Health Life
Care Insurance Total
1994 1993 1994 1993 1994 1993
Service Cost of
Benefits Earned $ 0.3 $ 0.3 $0.2 $ 0.1 $ 0.5 $ 0.4
Interest Cost on
Accumulated
Postretirement Benefit
Obligation 1.4 1.5 0.4 0.4 1.8 1.9
Net Periodic
Postretirement
Benefit Cost $ 1.7 $ 1.8 $0.6 $ 0.5 $ 2.3 $ 2.3
The discount rate used in the actuarial calculation was 8.50% and 7.25% in
1994 and 1993, respectively. The rate of increase in compensation level was
5.00% and 4.50% in 1994 and 1993, respectively.
For measuring the expected postretirement benefit obligation, the health
care cost trend rate ranged from 10.2% to 13.0% in 1994, grading down to an
ultimate rate of 6.0% in the year 2000.
A one percentage point increase in the assumed health care cost trend would
increase the aggregate of the service and interest components of 1994 net
periodic postretirement benefit cost by $0.2 million and the 1994 accumulated
postretirement benefit obligation by $1.4 million.
Long-Term Incentive Plans
In 1987 and 1990, the Company adopted Long-Term Incentive Plans which are
administered by the Compensation Committee of the Board of Directors to provide
officers and key employees with stock options, stock appreciation rights
("SARs"), performance units, and securities awards. A maximum of 3,500,000
shares of common stock may be issued pursuant to the exercise of options
and rights granted under the plans. At December 31, 1994, 1993, and 1992, Common
Stock reserved for future grants under the Long-Term Incentive Plans were
966,213 shares, 1,195,868 shares, and 1,625,993 shares, respectively. In 1994,
all SARs were exercised and the Company discontinued any additional grants of
SARs.
Transactions in stock options are summarized as follows:
1994 1993 1992
Outstanding at January 1, 810,587 746,934 581,207
Granted 248,447 367,461 180,373
Exercised (172,533) (206,957) (5,231)
Cancelled upon exercise
of SARs (6,042) (84,979) (2,460)
Forfeited (2,040) (11,872) (6,955)
Outstanding at December 31, 878,419 810,587 746,934
Exercisable at December 31, 293,737 283,285 293,009
Range of exercise prices of
options outstanding
at December 31, $ 11.31 $ 11.31 $ 11.31
to 29.75 to 27.38 to 25.63
Range of exercise prices
of options exercised $ 11.31 $ 11.31 $ 11.31
to 25.63 to 22.57 to 19.45
Grants of restricted and performance restricted stock for 1994, 1993, and 1992
are summarized as follows:
Date Shares Performance
Granted Restricted Restricted
February 1992 20,835 -
May 1992 34,350 53,400
December 1992 30,150 -
February 1993 40,568 63,414
December 1993 24,235 -
February 1994 16,450 -
All shares of performance restricted stock granted will become non-
restricted if certain financial goals are met by December 31, two years after
the date of the grant. Otherwise, 75% of the shares will become non-restricted
after three years; or 50% of the shares after four years; or 100% of the shares
will be forfeited after five years. On December 31, 1994, the first 25% of the
performance restricted stock granted in May 1992, and the second 25% of the
performance restricted stock granted in May 1991, was forfeited.
Restricted stock vests ratably over a three to four year period through
1997. Deferred compensation equivalent to market value at the date of grant is
recorded to additional paid-in capital and is amortized to compensation expense
over the vesting period. The amount amortized in 1994, 1993, and 1992 was $2.1
million, $2.1 million and $2.3 million, respectively. Unvested shares are
restricted as to transfer or sale.
In February 1994, the Company granted 1,629,000 Performance Units to key
employees instead of granting additional performance restricted stock. Each unit
has a target value of $1.00, but based on the Company's performance, each unit
may have an actual value ranging from $0.00 to $2.00 at the end of the three
year performance cycle. The performance period began on January 1, 1994 and will
end on December 31, 1996. Any distributions will occur during the first quarter
of 1997, and will be paid two thirds in the form of cash and one third in the
form of non-restricted stock. The amount accrued in 1994 was $0.5 million.
Performance Incentive Plan
A Performance Incentive Plan has been adopted by the Company, under which
the Compensation Committee may grant cash awards to eligible employees. For Plan
years 1994, 1993, and 1992, the Company paid $2.7 million, $2.3 million, and
$2.1 million, respectively.
Employee Stock Ownership Plans (ESOPs)
The Company maintains two Employee Stock Ownership Plans. ESOP I was
formed in June 1987, and ESOP II was formed in April 1989 (ESOP I and ESOP II
are collectively referred to as the "ESOPs"). Between 1987 and 1991, the
Company loaned ESOP I $34.5 million which it used to purchase 2,052,207 shares
of Common Stock.
Between 1989 and 1991, $31.3 million was loaned by the Company to ESOP II
which it used to purchase 1,466,957 shares of Common Stock.
In 1992 and 1991, the Company contributed 37,400, and 45,000 treasury
shares of Common Stock, respectively, to ESOP I as part of special award
programs and a success sharing program. In accordance with the success sharing
program, the Company accrued $2.8 million and $1.3 million for the purchase of
107,681 shares and 31,668 shares in 1994 and 1993, respectively.
All employees of the Company who have attained a minimum length of service
and satisfied other plan requirements are eligible to participate in the ESOPs,
except that ESOP II excludes employees covered by any collective bargaining
agreement with the Company.
The Company will make contributions to ESOP I and ESOP II in sufficient
amounts, when combined with dividends on the Common Stock, to retire the
principal and interest on the loans used to fund the ESOPs (see Note 12). Common
shares will be allocated to participants as the payments of principal and
interest are made on the loan. Contributions to the ESOPs charged to expense for
1994, 1993, and 1992 were $7.4 million, $7.1 million, and $7.0 million,
respectively. Dividend and interest income reduced the amounts charged to
expense in 1994, 1993, and 1992 by $1.8 million, $1.8 million, and $1.8 million,
respectively.
The number of allocated shares held by ESOP I and ESOP II at December 31,
1994, were 1,534,965 shares and 304,268 shares, respectively. The number of
suspense shares held by ESOP I and ESOP II at December 31, 1994, were 539,400
shares and 1,129,869 shares, respectively.
Note 7 - RECEIVABLES
1994 1993
Notes and accounts receivable $ 217.4 $ 154.3
Less-Allowance for
doubtful receivables 5.8 5.5
$ 211.6 $ 148.8
The following is a summary of the changes in the allowance for doubtful
receivables :
1994 1993 1992
January 1, $ 5.5 $ 4.2 $ 4.0
Additions charged against
earnings 3.2 2.3 2.6
Write-offs, net of recoveries (2.9) (1.0) (2.4)
December 31, $ 5.8 $ 5.5 $ 4.2
Note 8 - INVENTORIES
1994 1993
Finished products $ 109.6 $114.0
Raw materials 148.3 47.9
Supplies 33.1 24.1
$ 291.0 $186.0
The cost of approximately 74% and 59% of total inventories was determined
under the LIFO method at December 31, 1994 and 1993, respectively. At December
31, 1994 and 1993, market was lower than LIFO cost by $27.1 million and $59.6
million, respectively.
The Company acquires a major portion of its crude oil requirements through
the purchase of futures contracts on the New York Mercantile Exchange. The
Company also uses the futures market to manage the price risk inherent in
purchasing the crude oil in advance of the delivery date, and in maintaining the
inventories contained within its refinery and pipeline systems.
Note 9 - PROPERTIES AND EQUIPMENT
1994 1993
Properties and Equipment
Refining and Wholesale $ 1,024.4 $ 949.1
Retail 369.5 326.5
Allied Businesses 206.8 182.5
Corporate 34.7 33.9
1,635.4 1,492.0
Less - Accumulated depreciation 609.3 550.9
$ 1,026.1 $ 941.1
The charge against earnings for maintenance and repairs was $41.1 million
in 1994, $29.3 million in 1993, and $26.9 million in 1992. Interest capitalized
was $2.3 million in 1994, $6.1 million in 1993, and $6.1 million in 1992.
Expenditures for
Properties and Equipment
1994 1993 1992
Refining and Wholesale $ 89.3 $100.1 $143.8
Retail 49.3 26.5 4.8
Allied Businesses 22.3 4.4 19.6
Corporate 1.2 0.8 2.3
$162.1 $131.8 $170.5
Depreciation
1994 1993 1992
Refining and Wholesale $ 38.3 $ 35.1 $ 29.5
Retail 16.3 14.6 13.7
Allied Businesses 13.1 11.7 10.9
Corporate 3.2 2.9 2.7
$ 70.9 $ 64.3 $ 56.8
Note 10 - ACCRUED LIABILITIES
1994 1993
Accrued Taxes $ 65.3 $ 56.9
Accrued Royalties 6.7 7.1
Current Portion of Long-term
Shared Costs Liability (see Note 16) 8.0 8.0
Other Liabilities 90.9 56.4
$170.9 $128.4
Note 11 - OTHER LIABILITIES AND DEFERRED CREDITS
1994 1993
Post Retirement Benefit Obligation $ 28.3 $ 27.3
Long-term Shared Costs
Liability (see Note 16) 13.4 23.6
Deferred Credits 11.8 5.1
Other Liabilities 13.5 10.2
$ 67.0 $ 66.2
Note 12 - LONG-TERM DEBT
1994 1993
Commercial Paper $ 0.0 $ 0.0
10.75% Senior Notes* 150.0 150.0
9% Senior Notes 8.4 11.3
8.77% Senior Notes 30.0 30.0
8.35% Senior Notes 1.9 2.5
Medium Term Notes 145.0 145.0
Term Loan Agreement 0.0 35.0
Pollution Control Financings 10.9 10.9
8% Debentures 100.0 100.0
Bank Money Market Facilities 66.9 5.0
Other Notes 0.0 0.0
513.1 489.7
Less - Due within one year 3.9 3.5
$509.2 $ 486.2
*Prior to 7/14/89 - 11% Senior Subordinated Notes.
The aggregate maturities of the long-term debt obligations at December 31,
1994 for the next five years will be as follows, assuming no prepayments: 1995-
$3.9 million; 1996-$34.2 million; 1997-$33.0 million; 1998-$31.6 million; 1999-
$31.7 million; and all future periods-$378.7 million.
On February 13, 1995, the Company issued $75.0 million in non-callable
8.75% debentures due June 15, 2015. The proceeds from the issuance of the
debentures will be used for general corporate purposes, possibly including
payment of a scheduled $30.0 million principal installment on the 10.75% Senior
Notes (as defined below), and to fund anticipated capital expenditures
in 1995.
On January 6, 1994, the Company prepaid the $35.0 million balance on its
$65.0 million Term Loan Agreement (the "Term Loan").
During February 1993, the Company issued $46.0 million in medium-term notes
with an average rate of 7.44% and average maturities of 12 years. In February
1993, the Company filed a post-effective amendment to its existing shelf
registration, registering an additional $75.0 million in medium-term notes. On
April 1, 1993, the Company issued $100.0 million of 8% Debentures due April 1,
2023 under its shelf registration.
In August 1993, the Company filed a post-effective amendment to its
existing shelf registration and shelf registered additional debt securities in
the amount of $95.0 million. The combination of this amendment and existing
shelf registration as of December 31, 1994 enables the Company to issue up to
$100.0 million of debt securities with terms of up to 30 years.
The Company has two separate revolving credit facilities ("Agreement I" and
"Agreement II"). Agreement I has a face value of $200.0 million with a maturity
date of September 30, 1996. Agreement II matures on April 13, 1995, and has a
value of $100.0 million. Interest under Agreement I and Agreement II varies
depending on specified lending options available to the Company. Generally, the
variable conditions relate to the prime rate, certificates of deposit, and LIBO
rates, as adjusted upward by specified percentages. As of December 31, 1994, the
Company had no borrowings outstanding under Agreement I or Agreement II.
Agreement I and Agreement II, and Senior Notes (as defined below) all
contain various restrictive covenants relating to the Company and its financial
condition, operations, and properties. Under these covenants, the Company is
required to maintain a minimum current ratio and net worth. These covenants also
include restrictions on the payment of dividends. However, it is not
anticipated that such limitations will affect the Company's present ability to
pay dividends. At December 31, 1994, under the most restrictive of these
covenants, $250.3 million was available for the payment of dividends.
During 1994 there were no commercial paper (the "Commercial Paper")
borrowings. Outstanding Commercial Paper is reflected as long-term debt because
the Company has the intent and ability either to roll over the debt as it
becomes due or to convert such borrowings into long-term debt through revolving
credit borrowings. Proceeds from this program are used for general
corporate purposes.
At December 31, 1994, the Company had outstanding $66.9 million of
borrowings under bank money market facilities provided by major money center
banks at a rate of 6.50%. The bank money market facilities are uncommitted lines
of credit under which banks extend unsecured short-term credit to the Company
from time to time at market rates.
Agreement I and Agreement II are unsecured. Certain subsidiaries of the
Company have unconditionally guaranteed the repayment of all indebtedness and
the performance of all obligations incurred by the Company under Agreement I and
Agreement II.
On February 27, 1991, the Company issued $75.0 million of 9-3/8% Notes due
March 1, 2001 (the "Notes") under its medium-term note program. The aggregate
net proceeds were approximately $74.4 million.
In December 1991, the Company issued $24.0 million in various notes with an
average rate of 8.45% and maturities of 12 years.
In connection with the Spin-off, the Company sold $150.0 million of 11%
Subordinated Notes due April 30, 1999, (the "11% Subordinated Notes") to
institutional investors. On July 14, 1989, the original 11% Subordinated Notes
became 10.75% Senior Notes (the "10.75% Senior Notes") after certain contractual
conditions were met. Beginning April 30, 1995, the 10.75% Senior Notes are to
be repaid by five equal annual payments of $30.0 million. Since the Company
intends to refinance the $30.0 million repayment by the use of commercial paper
or other credit facilities which would be classified as long-term, and the
Company has the capacity and intent to do so, the current portion of the long-
term debt payable on April 30, 1995 has been classified as long-term debt.
Subsequent to the Spin-off, the Company placed $25.0 million of 9% Senior
Notes due 1987-1997 (the "9% Senior Notes") and $5.0 million of 8.35% Senior
Notes due 1989-1997 (the "8.35% Senior Notes) with an institutional investor and
loaned the proceeds to the ESOP I (see Note 6). In 1989, the Company placed
$30.0 million of 8.77% Senior Notes due 1997-2009 (the "8.77% Senior Notes")
with the same institutional investor and loaned the proceeds to the ESOP II (see
Note 6).
Cash payments of interest for 1994, 1993, and 1992 were $42.9 million,
$41.3 million, and $44.1 million, respectively.
Based on the borrowing rates currently available to the Company for bank
loans with similar terms and average maturities, the fair value of long-term
debt is estimated to be $511.4 million at December 31, 1994, including amounts
payable within one year.
Note 13 - PREFERRED STOCK
In June 1993, the Company issued 1.725 million shares of 5% Cumulative
Convertible Preferred Stock (the "Preferred Stock") in a private placement for
an aggregate of $86.3 million, before discounts and transaction costs. The issue
was priced at $50 per share with a dividend rate of 5 percent. The Preferred
Stock became convertible into the Company's Common Stock on September
8, 1993, at an initial conversion price of $26.50 per share. After June 15,
1996, the Preferred Stock is redeemable at the Company's option, subject to
certain conditions, for Common Stock, and after June 15, 2000, it is redeemable
at par for cash, at the Company's option.
Note 14 - STOCKHOLDERS' EQUITY
Common Paid-In Retained ESOP Treasury
Stock Capital Earnings Stock Stock
January 1, 1992 $ 0.3 $ 356.3 $ 137.4 $ (55.3) $ (1.1)
Net income 8.7
Cash dividends:
Common ($0.52 per share) (14.9)
Issuance of Key Employees'
and Directors'stock 0.0 0.5 1.8
Payment on ESOP note 3.7
Purchase of treasury stock (2.8)
Sale of stock to ESOP 0.7
Tax benefit of ESOP dividends 0.4
Options exercised 0.0 (0.1) 0.1
December 31, 1992 0.3 356.8 131.5 (51.6) (1.3)
Net Income 18.4
Cash dividends:
Common ($0.52 per share) (15.0)
Convertible Preferred
($1.28 per share)
See Note 13 (2.2)
Issuance of Key Employees'
and Directors'stock 0.0 1.4 0.9
Payment on ESOP note 4.3
Purchase of treasury stock (0.6)
Issuance of Convertible
Preferred stock* 84.3
Adjustment of minimum
liabilities of pensions (1.8)
Tax benefit of ESOP dividends 0.4
Tax benefit of stock options 0.4
Options exercised 0.0 1.9 (0.8) 0.4
December 31, 1993 0.3 444.8 130.5 (47.3) (0.6)
Net Income 75.8
Cash dividends:
Common ($0.53 per share) (15.4)
Convertible Preferred ($2.50 per share)
See Note 13 (4.3)
Issuance of Key Employees'
and Directors'stock 0.0 0.0 (0.1)
Payment on ESOP note 5.1
Purchase of treasury stock (3.4)
Adjustment of minimum liabilities
of pensions 0.8
Success sharing 0.0 0.9
Tax benefit of ESOP dividends 0.3
Tax benefit of stock
options 0.5
Options exercised 0.0 1.1 (0.9) 0.9
December 31, 1994 $ 0.3 $ 447.3 $186.8 $ (42.2) $ (3.2)
*The Preferred Stock that was issued in 1993 has a par value of $17,250 which is
not disclosed above since it does not round to the nearest $100,000.
At December 31, 1994 and 1993, the Company held 117,794 shares and 23,749
shares, respectively, as treasury stock.
Note 15 - LEASE COMMITMENTS
The Company leases certain machinery and equipment, transportation and
marketing facilities, and office space under cancelable and non-cancelable
leases, most of which expire within 20 years unless renewed.
Minimum annual rentals at December 31, 1994 were as follows:
Operating
Leases
1995 $ 26.2
1996 21.6
1997 18.5
1998 17.3
1999 7.4
2000 and thereafter 18.4
$ 109.4
Rental expense for operating leases was as follows:
1994 1993 1992
Total rentals $ 28.3 $ 21.1 $ 23.4
Less-Sublease rental income 0.7 0.7 0.5
Rental expense $ 27.6 $ 20.4 $ 22.9
The Company has an existing long-term lease arrangement (the "Brazos
Lease") to accommodate its continued retail outlet construction program. The
Brazos Lease had an initial lease term which expired in April 1997. In April
1994, the Company expanded the capacity of the lease by $25.0 million and
extended the primary term applicable to the properties under the lease by two
years, to April, 1999.
Rent payable under the Brazos Lease is based upon the amounts spent to
acquire or construct the outlets and the lessor's cost of funds from time to
time. At December 31, 1994, approximately $28.3 million of the $190.0 million
commitment remained available under the Brazos Lease to construct and/or
acquire retail outlets.
After the initial non-cancelable lease term, the Brazos Lease may be
extended by agreement of the parties, or the Company may purchase or arrange for
the sale of the retail outlets. If the Company were unable to extend the lease
or arrange for the sale of the properties to a third party in 1999, the amount
necessary to purchase properties under lease as of December 31, 1994 would be
approximately $160.0 million.
Note 16 - COMMITMENTS AND CONTINGENCIES
In connection with the Spin-off, the Company and Maxus entered into a
Distribution Agreement which, among other things, provides for the sharing by
the Company and Maxus of certain liabilities relating to businesses of Maxus
discontinued or disposed of prior to the Spin-off date. The Company's total
liability for such shared costs is limited to $85.0 million. Payments with
respect to the shared costs are made by Maxus and the Company is obligated to
reimburse Maxus for the Company's share promptly after receipt of Maxus' invoice
accompanied by appropriate supporting data. Inasmuch as the Company has already
reimbursed Maxus for more than $37.5 million, the Company's share of remaining
shared costs is one-third of the amounts paid by Maxus. Although some
expenditures are still subject to audit, the Company has reimbursed Maxus for a
total of $63.6 million as of December 31, 1994, including $10.2 million paid
during 1994. See Note 3 for a change in the method of accounting for the
liability.
Pursuant to the Distribution Agreement, the Company will also reimburse
Maxus for one-third of all payments for the cost of certain medical and life
insurance benefits for eligible retired employees made by Maxus after the Spin-
off date with respect to persons who retired on or before the Spin-off date (see
Note 6). The actuarial cost of these expected payments under the Distribution
Agreement is included in the Accumulated Postretirement Benefit Obligation
recorded as of January 1, 1992 (see Note 3).
The Company's commitments for future purchases are for quantities not in
excess of anticipated requirements and at prices which will not result in a
loss. There are no long-term contracts with crude oil suppliers which would fix
the cost of future deliveries. The Company anticipates that it will sustain no
losses in fulfillment of existing sales contracts.
During 1994, the Company entered into a long-term lease of land owned by
the Port Authority of Corpus Christi, Texas. In addition, the Port Authority
agreed to construct a crude oil terminal, using the Company as a construction
contractor, and to sell the terminal to the Company pursuant to an installment
sale/purchase contract upon completion at an agreed upon price of $12.0 million.
The installment sale/purchase was consummated in January, 1995.
The Company is a party to a number of lawsuits, the outcomes of which are
not expected to have a material effect on the Company's financial position or
results of operations.
Supplementary Financial Information (Unaudited)
QUARTERLY FINANCIAL DATA
(dollars in millions, except per share)
1994 Quarter Ended March 31 June 30 Sept. 30 Dec. 31
Net sales $ 583.8 $ 646.5 $ 700.4 $ 675.6
Gross profit(1) 52.1 82.3 68.7 62.8
Net income 12.2 27.5 20.6 15.5
Primary earnings per common share 0.38 0.91 0.67 0.49
Fully diluted earnings per common share 0.38 0.85 0.64 0.47
Cash dividends per share
Common $ 0.13 $ 0.13 $ 0.13 $ 0.14
Preferred 0.625 0.625 0.625 0.625
Market price per common share
High 30 28 1/4 28 1/2 29 1/8
Low 24 1/8 23 3/8 23 7/8 23 5/8
1993 Quarter Ended March 31 June 30 Sept. 30 Dec. 31
Net sales $ 620.8 $ 656.9 $ 650.5 $ 627.1
Gross profit(1) 39.1 60.2 50.9 35.3
Income before cumulative effect
of accounting changes 5.0 16.5 9.3 1.8
Cumulative effect of accounting changes (14.2) - - -
Net income (loss) (9.2) 16.5 9.3 1.8
Primary earnings (loss) per common share
Before accounting changes 0.17 0.56 0.28 0.02
Cumulative effect of accounting changes (0.49) - - -
Total $ (0.32) $ 0.56 $ 0.28 $ 0.02
Fully diluted earnings (loss) per common share
Before accounting changes 0.17 0.56 0.28 0.02
Cumulative effect of accounting changes (0.49) - - -
Total $ (0.32) $ 0.56 $ 0.28 $ 0.02
Cash dividends per share
Common $ 0.13 $ 0.13 $ 0.13 $ 0.13
Preferred - - 0.655 0.625
Market price per common share
High 21 7/8 22 1/8 26 1/8 27 3/8
Low 17 7/8 19 1/4 18 7/8 23 3/4
(1) Gross profit is sales and operating revenues less cost of products sold and
operating expenses and depreciation.
Selected Historical Financial Information
(dollars in millions, except per share)
1994 1993 1992 1991 1990
OPERATIONS
Sales and operating revenues:
Refining and Wholesale $1,320.8 $1,294.8 $1,290.4 $1,293.2 $1,457.3
Retail 974.3 958.1 970.7 908.1 856.6
Allied Businesses 311.2 302.4 341.5 374.6 394.0
Total $2,606.3 $2,555.3 $2,602.6 $2,575.9 $2,707.9
Operating profit:
Refining and Wholesale $ 146.8 $ 73.9 $ 68.1 $ 86.8 $ 152.8
Retail 58.9 62.7 46.6 26.1 17.8
Allied Businesses 26.0 15.0 22.9 32.5 29.0
Total $ 231.7 $ 151.6 $ 137.6 $ 145.4 $ 199.6
Income from continuing
operations $ 75.8 $ 32.6 $ 26.4 $ 37.1 $ 77.5
Net income $ 75.8 $ 18.4 $ 8.7 $ 37.1 $ 77.5
FINANCIAL POSITION
Current assets $ 540.4 $ 356.2 $ 358.5 $ 409.8 $ 448.8
Current liabilities 374.1 220.4 217.0 252.9 328.8
Properties and equipment,
less accumulated depreciation 1,026.1 941.1 897.6 791.2 668.9
Total assets $1,620.8 $1,349.2 $1,297.5 $1,222.3 $1,133.9
CAPITAL STRUCTURE
Long-term debt including portion due
within one year $ 513.1 $ 489.7 $ 536.9 $ 446.1 $ 372.2
Deferred income taxes 81.5 48.7 61.4 65.6 53.9
Stockholders' equity 589.0 527.7 435.7 437.6 337.8
Total $1,183.6 $1,066.1 $1,034.0 $ 949.3 $ 763.9
OTHER DATA
Capital expenditures $ 162.1 $ 131.8 $ 170.5 $ 180.1 $ 86.4
Depreciation 70.9 64.3 56.8 52.3 47.2
Book value per share* 18.45 16.40 16.50 16.76 15.45
PER COMMON SHARE
Primary earnings:
Continuing operations $ 2.45 $ 1.04 $ 0.92 $ 1.39 $ 3.04
Net income 2.45 0.55 0.30 1.39 3.04
Fully diluted earnings:
Continuing operations $ 2.34 $ 1.04 $ 0.92 $ 1.36 $ 2.78
Net income 2.34 0.55 0.30 1.36 2.78
CASH DIVIDENDS PER SHARE
Common Stock $ 0.53 $ 0.52 $ 0.52 $ 0.52 $ 0.48
Preferred Stock 2.50 1.28 - - 1.00
FINANCIAL RATIOS
Current ratio 1.4 1.6 1.7 1.6 1.4
Total debt as a percent of
total capital 43.4% 45.9% 51.9% 47.0% 48.7%
*Calculated excluding 1,669,264; 1,985,102; 2,286,705; 2,573,904; and 2,552,736
unallocated ESOP shares at December 31 of the respective years.
Five Year Operating Information
(dollars in millions, except per share)
1994 1993 1992 1991 1990
OPERATIONS
Crude Oil Refining Capacity
(barrels per day at year-end)
McKee 135,000 125,000 120,000 110,000 110,000
Three Rivers 70,000 70,000 55,000 55,000 55,000
Total 205,000 195,000 175,000 165,000 165,000
Crude Oil Refined (barrels per day)
McKee 126,235 118,949 112,909 111,765 112,910
Three Rivers 69,428 61,280 51,775 48,238 48,620
Total 195,663 180,229 164,684 160,003 161,530
Capacity Utilization 95.4% 92.4% 94.1% 97.0% 97.9%
Total Inputs (barrels per day)
Domestic Crude Oil 139,099 137,672 145,687 140,244 144,765
Foreign Crude Oil 56,564 42,557 18,997 19,759 16,765
Other Feedstocks 13,888 16,528 16,034 19,003 18,583
Total 209,551 196,757 180,718 179,006 180,113
Crude Oil Purchase Cost
(dollars per barrel) 17.08 18.57 20.64 21.83 24.54
Inventory (thousands of
barrels at year-end)
Crude Oil 7,717 2,499 1,796 3,085 2,545
Petroleum Products 3,277 3,736 2,845 3,509 3,420
REFINED PRODUCT SPREAD (dollars per barrel)
Product Sales Prices 21.53 22.39 24.04 25.55 28.52
Raw Material Costs 17.13 18.63 20.83 21.76 24.30
Refined Product Spread 4.40 3.76 3.21 3.79 4.22
PRODUCTS MANUFACTURED (barrels per day)
Gasoline 120,377 112,974 104,220 103,271 104,596
Diesel Fuel 44,425 39,952 31,462 34,478 35,350
Aviation Fuel 18,921 17,602 18,900 16,382 16,210
Other 26,478 26,014 24,965 24,900 25,263
Total 210,201 196,542 179,547 179,031 181,419
WHOLESALE REFINED PRODUCT SALES (barrels per day)
Gasoline 142,016 134,954 128,507 122,831 116,335
Diesel Fuel 49,102 43,774 36,487 37,686 39,731
Aviation Fuel 21,206 20,437 21,043 15,944 16,028
Other 13,373 12,872 13,156 12,148 12,463
Total 225,697 212,037 199,193 188,609 184,557
WHOLESALE REFINED PRODUCT SALES (dollars per barrel)
Gasoline 23.06 24.15 26.54 28.09 31.41
Diesel Fuel 21.46 22.99 24.49 25.39 28.87
Aviation Fuel 22.05 23.78 25.07 26.95 31.75
Other 14.32 14.43 13.45 14.24 14.99
Five Year Operating Information (continued)
(dollars in millions, except per share)
1994 1993 1992 1991 1990
RETAIL
Number of Retail Outlets (at year-end)
Company Operated 810 776 761 763 677
Company Owned 496 504 518 529 482
Company Leased 314 272 243 234 195
RETAIL SALES
Gasoline (barrels per day) 56,410 55,473 53,931 50,876 47,101
Diesel (barrels per day) 1,795 1,606 1,455 1,164 914
Merchandise ($000/day) 872.9 820.7 792.6 710.5 566.8
OTHER DATA
Number of Jobber Outlets
(at year-end) 1,206 1,194 1,163 1,155 1,237
Miles of Products Pipelines
(at year-end) 2,484 2,291 2,290 2,275 2,172
Miles of Crude Oil Pipelines
(at year-end) 1,289 2,110 2,110 1,839 1,839